The European Union is set to unveil a fresh package of sanctions against Russia as western leaders staged a show of support for the Ukrainian government.

The move comes after David Cameron, US president Barack Obama and other senior Nato leaders held talks with Ukrainian president Petro Poroshenko at the alliance summit in Wales.

British government sources said that the EU would unveil measures in Brussels tomorrow - including sanctions targeting state-owned Russian defence and energy companies.

They will also look to strengthen existing measures against state-owned banks and extend controls on the sale of military equipment to cover dual-use civilian military kit.

It is expected that the White House will announce similar measures against Moscow.

One source said they were designed to force Mr Putin "to the negotiating table and off the battlefield" in eastern Ukraine.

Earlier, Mr Cameron said that existing sanctions were already hurting the Russian economy.

"It is making a difference. The Russian economy was growing, it is now shrinking. Russian banks - some of them are getting short of money. The Russian stock market, the rouble, have suffered," he told BBC1 Breakfast.

"What Russia needs to understand is that if they continue with this approach. In Ukraine, this pressure will be ramped up.

"The Ukrainians know that they have our support and this sanctions pressure is the right way to tell the Russians that what they are doing is unacceptable."

UK Deputy Prime Minister Nick Clegg said he was "fully in favour" of the extension of sanctions on Russia.

Mr Clegg told BBC News: "It is essential that every time Vladimir Putin thinks he can carry on with impunity, he understands that there is a reaction in terms of further sanctions being applied."